I was talking to a landlord about his portfolio the other day and he expressed concerns as to how highly geared his portfolio was. He raised concerns with the Brexit uncertainty as to whether he should sell up one or two of his properties to pay down the mortgages on some of his other properties so that they would be owned outright or at a far lower Loan-To-Value. Furthermore, the concerns raised over the proposed government intervention from different parties didn’t have him filled with confidence (nor me fort that matter).
However, this got me thinking about York property and how much of it is owned outright and how much is owned with a mortgage etc. Incidentally, this links quite nicely with an article I wrote back in February of this year summarising that over a third of properties in York, since 2012, were bought without a mortgage.
What I love most about what I do is getting to have some great conversations with anyone who has an interest in the property market. I firmly believe we are in a people business and I love being able to connect the dots between landlords, tenants, buyers and sellers.
I’ve mentioned this before but one of the greatest benefits of property over other asset classes is the concept of leverage i.e. being able to buy a property for £100,000 without having to front the entire sum. When you own the asset with a mortgage, should you decide to pay down the debt you are just perpetually increasing your wealth as your property continues to appreciate in value.
That being said, the individuals I feel for are the ones who are trying to get onto the housing ladder. As per latest Land Registry data, property prices in York sell for an average of £258,202 and over the last twelve months, 31.99% of properties were bought outright with cash.
Interestingly, according to York Open Data, the number of York homes owned outright accumulate to 34% of all property ownership. Furthermore, 32% of property in York was owned with a mortgage and at least 18% of which is property being rented privately.
According to the same data, average house prices are 7.81 times the average annual salary. With lenders lending on average 4 – 5 times annual salaries, it’s no wonder so many are struggling to get on the property ladder.
So, what can we expect in the future as property prices in York continue to rise? My intuition tells me that as property prices continue to outstrip take home pay, we will see a reduction in homes owned outright as more individuals rely on the bank of mum and dad to stand a chance on getting on the property ladder.
For those who aren’t able to rely on the bank of mum and dad, does this mean it’s impossible to save up to buy a property in York as a first-time buyer? Absolutely not but it’s going to require some graft. With help from policies such as the Help-to-buy ISA (which tops up 25p for every £1 you put in), it is possible. Word to the wise, the Help-to-buy ISA policy expires at the end of this month (November 2019) so if you are looking to get on the property ladder and want a big boost, do not delay.
If you have any queries or require any assistance in discussing your options, please drop me a line.